1.

What is the law on Secrecy of Bank

Deposits?
According to Republic Act (RA) No. 1405 Section 2, “All deposits of whatever
nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby considered as of an absolutely
confidential nature and may not be examined, inquired or looked into by any
person, government official, bureau or office.”

Exceptions include “written permission of the depositor, or in cases of

impeachment, or upon order of a competent court in cases of bribery or
dereliction of duty of public officials, or in cases where the money deposited or
invested is the subject matter of the litigation.”

Deposits may only be disclosed if a bank account is being investigated in court.

This is also extended in the Foreign Currency Deposit Act of the Philippines, or
FCDA, also known as Republic Act No. 6426. Foreign currency accounts may not
be disclosed, except upon a written permission of the depositor.

Section 3 also states that, “It shall be unlawful for any official or employee of a
banking institution to disclose to any person other than those mentioned in
Section two hereof any information concerning said deposits.”

2. What will happen to any violation of

the Law on Secrecy of Bank Deposits?
Section 5 of the RA states that violators will be subject to “conviction, to an
imprisonment of not more than five years or a fine of not more than P20,000, or
both, in the discretion of the court.”

3. What accounts are covered in the

secrecy law?
Savings account, checking account, and other types of bank deposits are
included in the secrecy law. Money markets, trust funds, mutual funds, and the
like are not covered.

4. If someone purportedly gained access

to an individual’s bank account, does that
mean the bank involved isn’t safe? Should
I withdraw all my money from the said
account and move it to another bank?
Bank employees are able to see some bank accounts in the system. What’s
important is that they don’t disclose the information they see to anyone.

In the event of data breach, it is best to move your deposits to a bank with
stronger data protection in place.

5. What happens when the depositor dies

and the spouse or dependent requests to
withdraw the funds?
Upon knowing of the depositor’s death, Section 97 of the Tax Code allows banks
to freeze the deceased depositor’s account until the Estate Tax Clearance from
the BIR is submitted. this applies to both individual or joint accounts. The
withdrawal will only be granted if the Estate Tax has been paid.

The deposit is considered tax-exempt if it’s P200,000 or below, and the spouse
or dependent only needs to submit documents such as marriage certificate,
birth certificate, and certificate of deposit (e.g. a passbook) to withdraw the
account. However, if the amount deposited is more than P200,000, it is subject
to Estate Tax, and the spouse or dependent is mandated by law to pay a certain
percentage for the amount deposited. When it’s paid, a Certificate of Tax
Clearance will be provided to the spouse or dependent. It should be submitted
along with the Deed of Extra-Judicial Settlement of the Estate, and other
document requirements stipulated by the bank.

6. What has been done toward a more

transparent investigation for public
officials’ bank deposits?
At the height of the Bangladesh stolen government funds worth some $81
million, vice presidential candidate Senator Francis Escudero urged fellow public
officials to sign a waiver or written permission to the Office of the Ombudsman
to grant permission into all bank deposits and other investments, within and
outside the country.
This is in support of Senate Bill No. 16 he filed in 2016, which makes lifestyle
checks mandatory for public officials and employees. They will be required to
sign a waiver for the transparency of their bank accounts.

–Kristel Serran